Energy Burden Tax Credit Act
Summary
The Energy Burden Tax Credit Act aims to provide financial relief to individuals and families struggling with high energy costs. It introduces a new tax credit, Section 36C, allowing individuals to claim 75% of their qualified energy expenses exceeding 3% of their modified adjusted gross income. The credit is capped at $1,500 for individuals and $3,000 for joint returns, with income limitations of $75,000 and $150,000 respectively. The credit is set to expire after December 31, 2027.
Expected Effects
This act, if enacted, would directly reduce the tax burden for eligible individuals and families, providing them with more disposable income. It could incentivize energy conservation, although the impact may be limited by the income thresholds and credit caps. The act would also require adjustments to existing IRS procedures and federal payment calculations.
Potential Benefits
- Provides direct financial assistance to households facing high energy costs.
- May encourage energy conservation and efficiency.
- Could stimulate local economies as recipients spend their tax credits.
- Offers a targeted approach to address energy affordability concerns for lower and middle-income households.
- Simplifies tax filing for those claiming the credit.
Potential Disadvantages
- The income limitations may exclude some households genuinely struggling with energy costs.
- The credit cap may not fully offset energy burdens in high-cost areas.
- The temporary nature of the credit (expiring in 2027) creates uncertainty.
- Increased complexity for the IRS in administering the new credit.
- Potential for fraud or abuse in claiming the credit.
Constitutional Alignment
The bill aligns with the Constitution's general welfare clause (Preamble). Article I, Section 8 grants Congress the power to lay and collect taxes to provide for the general welfare of the United States. The establishment of a tax credit to alleviate the energy burden on individuals falls under this purview. The bill does not appear to infringe upon any specific individual rights or liberties outlined in the Bill of Rights.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).